European Justice Commissioner Viviane Reding is today meeting with leaders of European insurance companies to discuss European contract law in the insurance sector, the follow-up to the Court of Justice of the European Union's 1 March Test-Achats ruling on gender discrimination in insurance pricing, limitation periods for civil claims arising from road traffic accidents and insurance-related implications of collective redress proceedings.

1. European contract law in the insurance sector

The European Commission is preparing a legislative proposal for an optional European contract law to be presented in October. Differences in contract law may hinder cross-border trade for both small- and medium-sized companies (SMEs) and consumers buying across borders as well as for some insurance companies. This is why the Commission wants to start a dialogue with the insurance sector about the possible added value of an optional European Insurance Contract Law, on which work could start in 2012.

2. Follow-up decision of the Court in the Test-Achats case

In the Test-Achats case of 1 March 2011, the Court of Justice found that the principle of equal treatment for women and men should apply to insurance premiums and ruled that an exemption in EU non-discrimination legislation is invalid, with effect from the end of 2012. Following the ruling, Vice-President Reding announced that she would convene a meeting with business leaders from the insurance industry to discuss the judgement's implications (MEMO/11/123). The objective of today's meeting is to discuss how the industry can adapt to the Court's ruling. It will feed into guidelines that the Commission aims to adopt by the end of 2011, one year ahead of the deadline to comply with the ruling.

"The Court of Justice’s ruling in the Test-Achats case is final and binding,” said Viviane Reding, the EU's Justice Commissioner. "The Commission’s role is now to ensure that the judgment is properly implemented while guaranteeing legal certainty. That’s why the Commission is working on guidelines that could be issued by the end of this year so that the insurance sector can comply with the ruling by the end of 2012."

Victims of road traffic accidents abroad may have problems getting compensation because Member States have different rules on limitation periods (the amount of time after an accident for filing a claim). As a result, victims of road traffic accidents abroad may run the risk of receiving no compensation for harm suffered due to particularly short limitation periods applicable in the EU country where the accident occurred. The Commission intends to launch a public consultation on the matter before the end of the year. This is a follow-up from a previous consultation carried out by the Commission in 2009 and ongoing work on improving the rights of crime victims (IP/11/585).

4. Collective Redress

The Commission launched a public consultation on the future of collective actions which lasted from 4 February until 30 April (IP/11/132). The Commission received around 300 contributions from "institutional" stakeholders and almost 20,000 contributions from citizens. The insurance industry is one important voice in the discussion on collective redress. At the end of this year, the European Commission will issue a Communication – based on the feedback from companies and citizens – which will set out the Commission's intentions in this field.

Background on the Test-Achats case

The Test-Achats case (C-236/09), which was referred by the Belgian Constitutional Court, concerned gender discrimination in insurance premiums. It found that different insurance premiums for women and men constitute gender discrimination and are not compatible with the EU's Charter of Fundamental Rights.

Council Directive 2004/113/EC on equal treatment between men and women in regards to the access to and supply of goods and services (adopted unanimously by the EU Council of Ministers) prohibits direct and indirect gender discrimination outside of the labour market.

Article 5(1) of the Directive says that "Member States shall ensure that in all new contracts concluded after 21 December 2007 at the latest, the use of sex as a factor in the calculation of premiums and benefits for the purpose of insurance and related financial services shall not result in differences in individuals' premiums and benefits."

Article 5(2) of the Directive – which was not included in the Commission's initial proposal but was later added by the Council during the legislative process – gives Member States a right to derogate ("opt out") from the principle of equal treatment with regard to insurance contracts: "Member States may decide before 21 December 2007 to permit proportionate differences in individuals' premium and benefits where the use of sex is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data. The Member States concerned shall inform the Commission and ensure that accurate data relevant to the use of sex as a determining factor are compiled, published and regularly updated."

All Member States have made use of this derogation for some or all insurance contracts. Belgian law includes a derogation for life insurance in its national legislation. A dispute about the legality of Belgium’s derogation led to the Court of Justice’s Test-Achats ruling.